My understanding is that last year (2007), while everyone was salivating over the iphone and contemplating the its ramifications on the high-end phone market, Nokia sold the rest of the world budget phones and posted record profits. So I don't think they're really banking on the smartphone market -- at least as we've defined "smartphone" in the US. Especially when their high-end phones are selling for double or triple the price of the too-beat offering (iphone).
Everyone has to be chipping away at Nokia, last year they were selling more phones in a day than Apple was for an entire quarter.
Still happy with my N95-8gb though, none of my iPhone friends can take quality 5MP pictures or 640x480 video at 30fps. To me, a "smartphone" is the full package of phone / internet / media, and the iPhone media capabilities suck compared to the competition.
